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By Tom Winnifrith, The Sheriff of AIM | Wednesday 7 November 2018
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from ShareProphets). I have no business relationship with any company whose stock is mentioned in this article.
Two days after MySquar (MYSQ) suspended its shares on the AIM Casino and admitted to fraud and a cash crisis its odious slug of a chairman, the well known PR spinner Mr Piers Pottinger has quit as a director and from the company. Piers may wish to distance himself from what is a very messy crime scene but it is too late. He was either involved in the fraud or enabled it by his incompetence or his silence or both. He features in a detailed dossier I am preparing for the FCA and SFO urging them to launch a formal enquiry.
The fact that Pottinger is one of the great and good is all the more reason why he should come under scrutiny. And here is why he must be investigated.
In May, June and on 4 July 2017 MySquar published a series of statements reporting a massive ramp up in daily revenues. It was able to report a daily total within 48 hours. On 4 July investors were told that the ramp up had reached a point where in the last week of June average sales were $8,000 a day and MySquar was at breakeven.
MySquar CEO Erik Schaer is a criminal and he clearly knew that most of the ramp up in sales came from related party non-core invoicing. Frankly the invoicing might have been utterly bogus. He also knew that this invoicing stopped on June 30 so sales in July dropped off a cliff. He should have alerted investors. He did not so they assumed the ramp up in sales was continuing on trend and thus the shares surged.
On July 31 the company raised £1.268 million in a placing at 3.25p
There were also no related party non-core sales in August or September and finally on 11 October the company fessed up that sales had collapsed over the summer months and its shares tanked. The placing was clearly securities fraud.
A diligent chairman (and also a Nomad doing its job properly unlike Stuart Gledhill at shamed SP Angel) would have asked ahead of the placing if there had been any change in trading. I assume Pottinger & Gledhill did not in which case they were negligent.
Any normal chairman would have received monthly management accounts and so would have known by early August that trading had collapsed and forced a trading statement. Either Pottinger did not ask for any financial reports until October in which case he was asleep at the wheel and negligent again or he had the information and agreed with CEO Schaer not to release it which is far worse.
By October 11 it was clear to all that the placing in July was a fraud. I wrote about it often enough and we know MySquar directors read my stuff as its CEO commented at a presentation that I was very intelligent. A fair and balanced observation. But still Pottinger did nothing other than bank his fat pay cheque and allow the company to raise millions of pounds in various other financings while knowing exactly how it had committed fraud. That makes him – and the Nomad who allowed this – complicit. They are “enablers”
My dossier is being prepared and I would like to see a full criminal enquiry into MySquar and Schaer but also into Gledhill and Pottinger who are, at best, the enablers of a multi-million pound fraud and should face severe, and I’d hope career ending, consequences for that.
Of course AIM Regulation should at this point be hauling Gledhill and his colleagues at SP Angel over the coals but they too were alerted to the fraud and opted to do nothing so they too are enablers and thus in no real position to castigate Gledhill.
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